The Board of Governors has been historically unified when it comes to forecasts about Fed's policy, while the Fed presidents always dissent. Here are the FOMC member Hawks Vs Doves into 2017.
25 August, AtoZForex – Research analyst at Westpac, Sean Callow, suggested that there was a changing of the guard at the FOMC in 2015 as three new regional Fed presidents set to vote for the first time in 2017. Meanwhile, The Fed governors in Washington DC have drawn more attention than usual. Here are the FOMC member hawks Vs doves into 2017.
FOMC member Hawks Vs Doves
The focus is on the regional Fed presidents as they produce the widest divergence in policy views creating the most confusion in the markets about Fed’s possible policy path. The Board of Governors has been quite unified historically, rarely diverging over the policy while the Fed presidents always dissent. However, some differences of opinions started in 2015.
Washington DC-based Board of Governors:
Chair: Janet Yellen
Vice Chairman of Board of Governors: Stanley Fischer
Jerome Powell: As inflation is running below the targeted level, argued this month for patience on increasing rates.
Lael Brinard: in her key speech in October of last year she argued the case for erring on the side of being caution when raising the rates. Her June 2016 speech brought this theme back.
Daniel Tarullo: Being focused on financial regulation, Tarullo drew attention in November of the previous year by arguing the Fed is far from meeting its inflation target. In July of this year, Tarullo said he needs more convincing evidence that inflation is moving towards 2%.
Bill Dudley: in line with Board of Governors including Yellen.
Source: Westpac
From the voting regional presidents in 2016
Hawk: Esther George, Kansas City Fed president.
Centrist/Hawk: Loretta Mester: Cleveland Fed president, said in July that the economy is at full employment and there are financial stability risks of low-interest rates.
Centrist/Rebel: James Bullard, St. Louis Fed. His outlook of just one hike by 2018 is the most dovish at the FOMC, but given the history of the swings in policy, he is not in the traditional doves group yet.
Dove: Eric Rosengren, Boston Fed. In his 2013 voting rotation he followed the dovish tradition of the Boston Fed, however, this year ha has been in line with the consensus view. In June he stated that the economy is at full employment and there are signs of inflation moving up.
See also: Here’s what July FOMC minutes say about Fed rate hike
2017 FOMC meetings voters
Robert Kaplan, Dallas Fed President sounds less hawkish than his predecessor. In January of this year, Kaplan said that he expects to be a centrist.
Neel Kashkari, Former Treasury official PIMCO MD, and Minneapolis Fed, said this month that he does not see much inflationary pressure and the Fed has the “luxury of time” in the term of raising interest rates.
Patrick Harker, Philadelphia Fed President looks to be slightly hawkish. In July, Harker projected funds rate to come close to 3.0% by the end of 2018 and he stated that it may be appropriate to raise the rates twice this year.
Dove: Charles Evans, Chicago, was expecting 2 rate increases this year. This month he said he doesn’t see core PCE inflation rising above 2% until 2018, but “one interest rate increase this year” is possible.
Non-voters of 2016 and 2017
Hawk: Jeffrey Lacker, Richmond, was true to his hawkish stripes in 2015. In May of 2016, he argued for a June rate hike, which made him most hawkish current member. Lacker said that risks to the US economy from outside have totally dissipated.
Centrist: Dennis Lockhart, Atlanta, predicted in August 2016 a serious discussion of the rate increase and two rate increases this year. Now he sees scope for two increases in 2017 “possibly more”.
John Williams, San Francisco, originally, dovish but since 2013 he is in line with the majority. In August he stated: "In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later."
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